Frontrunner - 7th September 2018

London wheat futures lost £8 per tonne this week, slipping to seven-week lows as the bullish rivers ran dry. Russia chose not to introduce any restrictions to their wheat exports and this has been the catalyst for a wave of long liquidation on world futures markets. However, it is likely that this issue will resurface in due course. It is estimated that by the end of September, Russia will have shipped up to 14 million tonnes of wheat; a record pace which is not sustainable. In their August report, the USDA estimated the Russian exportable surplus to be 35 million tonnes and 40% of this will have gone in the first three months of the campaign. It is thought that when shipments reach 25 million tonnes, Russia will have to act to protect their domestic market from rising wheat prices

Vivergo to close

Vivergo Fuels announced closure of their Hull plant yesterday due to "the continued difficult trading environment and delays in the implementation of E10 in the UK". Read Vivergo's full announcement here.

Mixed fortunes for Australia

Farmers in Australia's Eastern grain belt have endured a second year of drought conditions. At one point, analysts were suggesting the country would have a disastrous harvest with only 14 million tonnes of wheat. However, in Western Australia, the good rain in August have helped the state reach a record output; now seen at 11 million tonnes which is well above the ten-year average of 8.4 million tonnes. Overall, Australian wheat production is now reaching 20 million tonnes, although this is still below last year's 21.3 million tonnes and the 2016/17 record 31.8 million tonnes.

BARLEY

Feed barley - ration importance remains unchanged

Barley continues to trade at small discounts to wheat and has managed to sustain this level because of its importance as a source of fibre in animal feed rations. Already depleted winter fodder stocks are reportedly being fed on farm far earlier than normal due to the lack of grass growth over summer. As we enter autumn and move closer to housing, compound rations will soon make up a more significant part of livestock diets.

New export demand in the form of a Saudi tender for one million tonnes arrived this week. Last month's Tunisian tender was met mainly by Black Sea long holders but this one will attract the interest of Western European exporters.

Malting barley – harvest reaches the home straight

The malting barley market continues to wait for brewers' interest, with premiums over feed barley still large for the time being.

Again, localised showers have limited harvest progress but the general feeling is that three-to-five good cutting days should see Scotland over the line. Average yields will be down on previous years, with most reports ranging between 4.8 – 5.5t/hectare. Further rain could have a direct impact on grain quality and will be one to watch.

South of the border, reflection on the spring barley harvest is beginning. Both Laureate and Planet have performed well with grain nitrogen levels in general lower than Propino. Attention has started to shift towards the 2019 crop; please keep in touch with your local Frontier farm trader to discuss the different contract options available.

​OILSEED RAPE

Strong sterling weighs in on domestic values

This week saw plenty of Brexit news suggesting that the UK and EU are coming closer to striking some sort of trade deal. In turn, sterling has strengthened against the euro and has had a negative effect on domestic rapeseed prices. This combined with a five euro decrease in MATIF rapeseed (Nov18) on the week led to five days of relative price weakness. The European crush continues to import competitively priced Black Sea and Canadian origin oilseed, creating good cover through until the end of the year.

World oilseed news

Next week sees the USDA crop progress and World Agricultural Supply and Demand Estimates reports published. The trade will be keen to see the numbers after some controversial statistics last time.

Trade disputes between China and the US remain the main factor in the soy complex, with China rumoured to be struggling for soybean cover either side of Christmas. One of China's biggest consumers of soybeans – pig feed producers – have faced uncertainty this week after serious outbreaks of African swine fever. The likelihood of this affecting the soy complex is uncertain.

This week Argentina issued export taxes on soybeans, meal and oil which was widely expected by the market. The weak peso has made Argentinean exports competitive but an interest hike to 60% has caused distraction in their market.

Australia has seen some rain on the East Coast but the key canola cropping areas are mostly missing out. The overall weather outlook for September is drier than average.

PULSES

Feed bean prices supported

The feed bean market has remained firm this week, as the realisation of a small crop combined with continued interest from the UK and continental feed bean buyers chasing a relatively small number of farm parcels pushes up prices. In most areas, feed beans are now trading at £200/t for Sept/Oct movement. Any further rises will depend on alternative feed substitutes and available compounders. Some products like soybean meal are getting cheaper, but rapeseed meal is more expensive now than it has been all season.

Human consumption grade

There are a few bean samples north of the Humber that are making the grade for human consumption. With values trading in excess of £220/t it's definitely worth ensuring that your local Frontier farm trader organises the collection of new crop samples.

FERTILISER

Nitrogen

It's been a quiet week on ammonium nitrate sales, mainly due to last week's price increase by CF Fertilisers/Yara. Nitram is now at between £270 - £280 for delivery later in the year. Whilst sales are slow on AN, the world urea market keeps heading upwards. In the past few days, there has been an increase in traded volumes at higher levels than in the previous week. Prices are pushing higher due to increased demand, coupled with production issues and a lack of Chinese offers to the market. The UK still has urea volumes to trade but replacement vessels will be at higher numbers – circa £300 plus on farm.

Sulphur grades

The current UK rape crop is desperate for some decent rainfall. The likelihood is that once this arrives and the crops look fine, the next round of sulphur grades will be considered. Availability remains tight with delays in production and limited volumes offered to the market. Please keep in touch with your local Frontier contact.

PKs

The decent weather has given some customers the chance to replace phosphate and potash removed in the harvest straw. High demand this season has meant more straw was baled rather than chopped, resulting in a higher requirement for nutrients. Speak to us for competitive deals on TSP and MOP or combinations including magnesium and sulphur.

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